Wednesday, November 13

Maxis Ananda sale speculations linger on house-cleaning exercise

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KUCHING: There has been speculation again that Ananda Krishnan may sell his 29 per cent stake in Maxis Bhd (Maxis) for RM35 billion or RM16 per share.

Analyst Lim Tee Yang of RHB Research Institute Sdn Bhd (RHB Research) said in a research note that these rumours were fueled by the house-cleaning exercise in Maxis involving the departure of several top management staff.

Currently, Ananda owns 45 per cent (via Usaha Tegas Sdn Bhd) in the holding company, Maxis Communications Bhd (Maxis Communications), which in turn owns 65 per cent in Maxis.

The other shareholders of Maxis Communications are Saudi Telecom – 25 per cent – and certain bumiputra shareholders which made up the final 30 per cent.

Lim is neutral to the speculation as it involves the holding company, Maxis Communications, and also finds it unlikely that there is any party who has the financial capability to acquire Ananda’s stake or the willingness to pay more than double what Maxis is currently trading at.

Aside from Maxis Communications having high valuations due to its additional mobile operations in India and Indonesia, Lim found that Ananda might not need the cash given that he had sold Tanjong Energy Holdings to 1Malaysia Development Bhd (1MDB) for RM8.5 billion last year.

Overall, Lim expected earnings growth to remain tepid as margins might still be at risk if device subsidies escalate or cost discipline is not maintained.

RHB Research thus maintains its ‘neutral’ call on Maxis with an unchanged fair value of RM7.15 per share.

In contrast, analyst Cheow Ming Liang of the research arm of Kenanga Investment Bank Bhd (Kenanga Research) believed that while the chances for these rumours to materialise are low at this point, it is not impossible, given that there is a newcomer – Puncak Semangat Technology Sdn Bhd (Puncak Semangat Technology) – who may potentially explore the possibility of buying over Ananda’s stake.

Puncak Semangat Technology, a new telco player which had won a block of 4G LTE spectrum, is one of the names being linked to a possible acquisition of Ananda’s stake in Maxis.

Cheow noted that it would make sense for any newcomers who have very deep pockets, to enter the capital expenditure-intensive telco industry by acquiring the existing operators.

As such, Kenanga Research maintained its FY13 to FY14 earnings forecasts and its ‘outperform’ call with a target price of RM7.17 per share.